For the vast majority of firms, it doesn't scale well, in terms of time and bandwidth spent by the General Partners of the firm. The partner-time-spent-per-dollar-deployed ratio is extremely unfavorable, and thus it is not the most efficient way to deploy capital.

Interestingly, most firms also make the implicit assumption that partner time spent with a company equates to a positive contribution to the company. While there isn't always that correlation, for the most part it's a reasonable assumption. But even if you factor out the assumptions about proactive involvement and positive contributions, just tracking the company, maintaining the proper working relationship and a shared understanding of what the business is trying to accomplish, and other such activities, are time-consuming, and still produce a very unfavorable efficiency ratio.

For most firms, this is not a problem worth solving. Fortunately, we have a couple of General Partners who are crazy-energetic and very interested in vicariously exploring out of the box ideas, and who use phone, email, and instant messenger effectively to maintain close working relationships with our seed investments, and add value.

Secondarily, we've found that many firms worry about having to explain large volumes of failures. We don't. As we discuss here, because these are very early stage, riskier investments, we do expect failures in larger numbers. We make it clear to entrepreneurs that the seed money is for proving or disproving something important.